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3 Grocers Using Tech to Combat Food Waste and Drive Profits

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The first thing most consumers see when they walk into a supermarket is the produce department. It’s specifically designed to evoke bounty, with gleaming, freshly misted piles of farm-fresh fruits and vegetables in every colour imaginable.

But the problem with bounty is that it can lead to waste. In fact, the USDA estimates that in-store food losses in the US total 43 billion pounds each year, and that supermarkets may lose $15 billion annually in unsold fruits and vegetables alone. Typical culprits include overstocked product displays, the expectation of cosmetic perfection, pack sizes that are too large, around-the-clock prepared food availability, overzealous “sell by dates, and damaged, unpopular, or outdated promotional products.

All too often, these are a built-in reality for grocery stores, who are spending money on inventory that won’t sell and contributing to grocery store shrink, not to mention the perception problem they’re experiencing as consumers become more environmentally conscious.

Grocery stores, with their massive connections throughout the value chain, from farm to table, have a tremendous incentive to reduce food waste, not only for environmental reasons, but for financial reasons. Here’s a look at how several large North American and international retailers are facing up to the problem of grocery store food waste, and what they’re doing about it.

 

Walmart Taps Machine Learning to Quell Waste in the Supply Chain

To understand the implications of grocery store food waste for a retailing giant like Walmart, consider the banana. Walmart sells 1.5 billion pounds of bananas each year in the United States alone—they are one of its top-selling items—but that figure only accounts for about 70 percent of the company’s banana harvest; the other 30 percent are wasted. That’s a lot of brown bananas.

To address such inefficiencies across its massive multinational supply chain, Walmart developed an in-house suite of apps called Eden, which it uses to track the quality and distribution of produce along every step of its journey. The backbone of the system is an algorithmic database of more than 1 million images that can help stakeholders along the supply chain determine ripeness in the bananas, or any other produce, to get them on the shelves sooner.

Once applied, Eden’s machine learning insights could help Walmart optimize its banana stocks to the tune of a $170 million annual savings, according to an analysis by the UCLA Anderson School of Management. And that’s just bananas. Overall, Walmart hopes its investment in Eden will save $2 billion over five years.

While Walmart’s Eden is a revolutionary new tool in the retailer’s fight against food waste, it’s not a one-size-fits-all solution. Other retailers might consider vendor systems that rely on sensors over machine learning to combat grocery store food waste. FreshSurety and Zest Fresh both use sensors to analyze a product’s exposure to the elements at various points along its journey from field to shelf, anticipating spoilage and assigning carton-level freshness assessments based on data points like moisture and temperature, to help retailers make merchandising decisions.

 

Kroger Seeks Disruptive Technology to Eliminate Waste

With its flagship brand and dozens of banners throughout the United States, Kroger is among the world’s latest supermarket chains by revenue, and has a massive opportunity to play a leading role in reducing grocery store food waste. The company has ambitions to entirely eliminate food waste across its stores by 2025 and is opening is wallet, in a big way, to hunt for technological solutions that can help along the way.

Kroger’s Zero Hunger | Zero Waste innovation fund promises grants of $25,000 to $250,000 for innovators working on emerging technology projects geared toward eliminating food waste. The scope of the food waste challenge is so sweeping that small start-ups, like the ones Kroger is looking to back, can attack different parts of the problem from different angles, and a series of small actions can achieve significant results.

One such startup already working in the field is Apeel, makes an edible coating that can be applied to produce to reduce evaporation and dramatically slow degradation. It has drawn backing from the likes of Bill Gates and Andreessen Horowitz, and Kroger is already stocking Apeel-coated avocados in 100 of its stores. By working with such existing startups and investing heavily to find the next big thing in food waste tech, Kroger is signaling to its customers and investors that it’s not merely going to be a bystander when it comes to tackling the food waste problem—it’s going to be on the front lines.

 

Stop & Shop Converts Food Waste into Clean Energy

Cutting-edge supply chain management and solutions offered by disruptive technology startups are two potentially effective weapons in the ongoing fight against grocery store food waste. But under current conditions, there will continue to be instances where excess inventory is unavoidable, and perishability comes into play, particularly for produce and deli goods.

Ahold Delhaize’s Stop & Shop chain is relying on technology that diverts inedible food from landfills by converting it into biogas, using a process called anaerobic digestion. The 24,000-square-foot Stop & Shop Green Energy Facility in Massachusetts was one of only two such facilities in the United States as of late 2018—and the amount of energy produced there is enough to power a significant portion of Stop & Shop’s adjacent distribution center.

By turning would-be landfill matter into energy, Stop & Shop has found a way to make its own operations more streamlined, and it’s an excellent use of otherwise inedible food. On the other hand, collecting inedible food waste from 208 stores to power only part of a distribution facility is a long way from the far-reaching societal impact most retailers fancy themselves as being capable of. And from a profit standpoint, there’s no recouping the cost of spoiled food—a better solution would be to not have purchased it in the first place. Overall, however, Stop & Shop’s experience has shown biogas to be a promising alternative to the problem of dealing with inedible grocery store food waste.

 

The Future of Food Waste

Food waste is not a problem for which there exists a one-size-fits-all solution. It’s a systemic societal problem that spans not only supply chains but household psychology, and grocery stores are but one (rather large) front in the ongoing campaign.

But there’s a massive upside for retailers to gain the upper hand, not only from a reputational standpoint, but on a balance sheet. Whether it’s investing heavily in technology that can revolutionize distribution networks to ensure freshness, or funding startups that might yield the next great innovation in food tech, the problem should be viewed over an appropriate time horizon. The most pro-active companies, like WalMart and Kroger, are thinking long-term.

More immediate steps, like Stop & Shop diverting inedible food waste into biogas programs, are also helping to chip away at this $160 billion problem.

We’re in the early stages of large retailers openly addressing the issue of grocery store food waste with transparency and plans to tackle it, and this newfound accountability—to the consumer, to the shareholder, and to the environment—might be the most meaningful step yet taken toward reducing the size of the problem.

 

Learn more about how CB4’s machine learning tool can help grocers reduce food waste by anticipating and meeting consumer demand at store and SKU-level.

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